PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 15, 1992)
$60,000,000
SYSTEM ENERGY RESOURCES, INC.
FIRST MORTGAGE BONDS, 7 5/8% SERIES DUE 1999
The Offered Bonds will mature on April 1, 1999. Interest on the Offered Bonds
is payable semi-annually on April 1 and October 1 of each year, beginning
October 1, 1994. Except as described in the next sentence, the Offered Bonds
will not be redeemable at the option of the Company. The Offered Bonds are
redeemable at any time upon at least 30 days' notice at the special redemption
price with certain deposited cash or the proceeds of released property. In all
such redemptions, accrued interest to the date fixed for redemption is also
payable. See "Description of the Offered Bonds--Redemption and Purchase of
Offered Bonds" herein.
The Offered Bonds, together with all other First Mortgage Bonds now or
hereafter issued under the Company's Mortgage, are secured by a first mortgage
lien on substantially all of the Company's properties, which consist of the
Company's interest in the Grand Gulf Nuclear Electric Generating Station, and
by the assignment of the Company's rights to payments under certain support
agreements between the Company and affiliates. Other indebtedness of the
Company is secured by assignments of these support agreements, and the Company
has retained the right to assign these agreements to future holders of its
indebtedness.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Offered Bond......................... 99.850% .625% 99.225%
Total.................................... $59,910,000 $375,000 $59,535,000
</TABLE>
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(1) Plus accrued interest from April 1, 1994.
(2) Before deduction of expenses payable by the Company, estimated at $125,000.
The Offered Bonds are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Offered Bonds will be made through the
book-entry facilities of DTC, on or about April 28, 1994.
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SALOMON BROTHERS INC
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The date of this Prospectus Supplement is April 21, 1994
<PAGE>
1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding System Energy Resources, Inc. (the
"Company"), is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus or incorporated by reference herein and, therefore,
should be read together therewith.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the $60,000,000
principal amount of the Company's First Mortgage Bonds, 7 5/8% Series due 1999,
offered hereby (the "Offered Bonds"), together with other funds provided by the
Company, will be used to meet $30,000,000 of mandatory sinking fund payments
and $30,000,000 of optional sinking fund payments due as of May 1, 1994 on the
Company's First Mortgage Bonds, 11% Series due 2000.
THE COMPANY
The Company is a wholly-owned subsidiary of Entergy Corporation ("Entergy").
Its principal asset consists of a 90% ownership/leasehold interest in a 1,250
megawatt nuclear-powered electric generating unit near Port Gibson,
Mississippi. The Company sells the power and energy therefrom exclusively to
four affiliated companies which are also subsidiaries of Entergy under a
Federal Energy Regulatory Commission-approved wholesale power agreement.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues.............................. 650,768 723,410 686,664
Operating Income................................ 272,202 323,176 318,812
Net Income...................................... 93,927 130,141 104,622
Ratio of Earnings to Fixed Charges(a)........... 1.87 2.04 1.74
<CAPTION>
AT DECEMBER 31,
-----------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.................................... 3,891,066 3,672,441 3,642,203
Long-Term Debt (excluding current maturities)... 1,511,914 1,755,308 1,682,265
Common Shareholder's Equity..................... 1,017,931 1,157,097 1,164,656
</TABLE>
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(a) "Earnings", as defined by SEC Regulation S-K, represent the aggregate of
(1) net income, (2) taxes based on income, (3) investment tax credit
adjustments--net and (4) fixed charges. "Fixed Charges" include interest
(whether expensed or capitalized), related amortization and interest
applicable to rentals charged to operating expenses.
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AVAILABLE INFORMATION
With reference to the information under the heading "Available Information"
in the accompanying Prospectus, the address of the public reference facilities
maintained by the Securities and Exchange Commission in New York, New York,
where reports and other information with respect to the Company can be
inspected and copied, has been changed to Seven World Trade Center, 13th Floor,
New York, New York 10048.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. At the date of this Prospectus Supplement, the
Incorporated Documents consist of the Company's Annual Report on Form 10-K for
the year ended December 31, 1993 and the Company's Current Report on Form 8-K
dated March 21, 1994.
DESCRIPTION OF THE OFFERED BONDS
The following description of the particular terms of the $60,000,000
principal amount of the Company's First Mortgage Bonds, 7 5/8% Series due 1999,
offered hereby ("Offered Bonds"), supplements the description of the general
terms and provisions of the New Bonds set forth in the accompanying Prospectus
under the heading "Description of the New Bonds," to which description
reference is made. As used hereinafter, the terms "New Bonds," "Trustees,"
"Corporate Trustee" and "Mortgage" shall have the same meanings as the same
terms used under the heading "Description of the New Bonds" in the accompanying
Prospectus.
ISSUANCE, INTEREST, MATURITY AND PAYMENT. The Offered Bonds will be issued
pursuant to the provisions of the Nineteenth Supplemental Indenture, to be
dated as of April 1, 1994, will mature April 1, 1999, and will bear interest at
the rate shown in their title, payable April 1 and October 1 of each year,
commencing October 1, 1994 for the period beginning April 1, 1994. Interest
will be paid to the persons in whose names the Offered Bonds are registered at
the close of business on the March 15 or September 15, as the case may be,
preceding each semiannual interest payment date (with certain exceptions, as
provided for in the Mortgage). Principal and interest are payable in New York
City. The Company has covenanted to pay interest on any overdue principal and
(to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest on the First Mortgage Bonds of all
series at the rate of interest per annum shown in their title.
REDEMPTION AND PURCHASE OF OFFERED BONDS. Except as described in the next
sentence, the Offered Bonds will not be redeemable at the option of the
Company. The Offered Bonds will be redeemable, in whole or in part, on 30 days'
notice at any time at a special redemption price equal to their principal
amount with the proceeds of insurance or released property or upon certain
dispositions of property, including condemnation or abandonment of
substantially all of the Grand Gulf Station or certain dispositions of property
which would materially impair the continuing electrical generation operations
of the Company's share of the Grand Gulf Station, in each case together with
accrued interest to the date fixed for redemption.
Cash deposited under any provision of the Mortgage (with certain exceptions)
may be applied to the redemption or purchase (including the purchase from the
Company) of First Mortgage Bonds of any series.
BOOK-ENTRY OFFERED BONDS. The information under the heading "Description of
the New Bonds--Form and Exchange" in the accompanying Prospectus will not be
applicable to the Offered Bonds. Except under the circumstances described
below, the Offered Bonds will be issued in the form of one fully registered
bond that will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC"), or such other depository as may be
subsequently designated, and registered in the name of Cede & Co., as nominee
for DTC.
So long as DTC, or its nominee, is the owner of the Offered Bonds, DTC or
such nominee, as the case may be, will be considered the sole registered holder
of the Offered Bonds for all purposes under the
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Mortgage. Payments of principal of and premium, if any, and interest on the
Offered Bonds will be made to DTC or its nominee, as the case may be, as the
holder of the Offered Bonds. Except as set forth below, owners of beneficial
interests in the Offered Bonds will not be entitled to have any of the
individual Offered Bonds registered in their names, will not receive or be
entitled to receive physical delivery of any such Offered Bonds and will not be
considered the holders thereof under the Mortgage.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed, the Company will issue individual
registered Offered Bonds in exchange for the Offered Bonds held by DTC. In
addition, the Company may at any time and in its sole discretion determine not
to have the Offered Bonds held by DTC and, in such event, will issue individual
registered Offered Bonds in exchange for the Offered Bonds held by DTC. In any
such instance, an owner of a beneficial interest in the Offered Bonds will be
entitled to physical delivery of individual Offered Bonds equal in principal
amount to its beneficial interest and to have such Offered Bonds registered in
its name. Individual Offered Bonds so issued will be issued as registered
Offered Bonds in denominations of $1,000 or any multiple thereof.
Upon the issuance of the Offered Bonds, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of
beneficial interests to the accounts of institutions that have accounts with
DTC ("Participants"). The accounts to be credited will initially be designated
by the Underwriter or the Company. Ownership of beneficial interests in the
Offered Bonds will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in the
Offered Bonds will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC (with respect to the
Participants' interests) or by Participants or persons that hold through
Participants (with respect to persons other than Participants). The laws of
some states require that certain purchasers of securities take physical
delivery of such securities. Such limits and such laws may impair the ability
to transfer beneficial interests in the Offered Bonds.
Upon receipt of any payment of principal, premium or interest in respect of
the Offered Bonds, DTC's current practice is to credit immediately
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Offered Bonds
as shown on the records of DTC. Payments by Participants to owners of
beneficial interests in the Offered Bonds will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in street name, and
will be the responsibility of such Participants, subject to any statutory or
regulatory requirements that may be in effect from time to time. Conveyance of
notices and other communications by DTC to Participants and by Participants to
other beneficial owners will be governed by arrangements among them, subject to
any statutory and regulatory requirements as may be in effect from time to
time.
Each purchaser of Offered Bonds must rely on (1) the procedures of DTC, and,
if such purchaser is not a Participant, the procedures of the Participant
through which such purchaser holds its beneficial interest, to receive payments
and notices, and (2) the records of DTC and, if such purchaser is not a
Participant, the records of the Participant through which such purchaser holds
its beneficial interest, to evidence its beneficial ownership of Offered Bonds.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities of its Participants and
facilitates the clearance and settlement of securities transactions among its
Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. DTC's Participants include securities
brokers and dealers (including the Underwriter), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or
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<PAGE>
indirectly. The rules applicable to DTC and its Participants are on file with
the Securities and Exchange Commission.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company and the Underwriter take no responsibility for the
accuracy thereof.
Neither the Company, the Trustees, the Underwriter nor any agent for payment
on or registration of transfer or exchange of such Offered Bonds will have any
responsibility or liability for any of the records relating to or payments made
on account of beneficial interests in any of the Offered Bonds or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
ADDITIONAL SECURITY FOR OFFERED BONDS. The Offered Bonds will have as
additional security the sole and exclusive benefit of the Twenty-ninth
Assignment of Availability Agreement, Consent and Agreement and the Twenty-
ninth Supplementary Capital Funds Agreement and Assignment, respectively. (See
"Description of the New Bonds--Security" in the Prospectus.)
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
between the Company and Salomon Brothers Inc (the "Underwriter"), the Company
has agreed to sell to the Underwriter, and the Underwriter has agreed to
purchase, the Offered Bonds. The Underwriting Agreement provides that the
obligation of the Underwriter is subject to certain conditions precedent and
that the Underwriter is obligated to purchase all of the Offered Bonds if any
are purchased.
The Underwriter has advised the Company that it proposes initially to offer
the Offered Bonds to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .375% of the principal amount of the Offered
Bonds. The Underwriter may allow and such dealers may reallow a discount not in
excess of .250% of the principal amount of the Offered Bonds to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company does not intend to apply for listing of the Offered Bonds on a
national securities exchange. The Underwriter may make a market in the Offered
Bonds, but is not obligated to do so and may discontinue market-making at any
time without notice. No assurances can be given as to the liquidity of, or that
there will be a secondary market for, the Offered Bonds.
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<PAGE>
PROSPECTUS
SYSTEM ENERGY RESOURCES, INC.
FIRST MORTGAGE BONDS
System Energy Resources, Inc. (the "Company") may offer from time to time
not to exceed $500,000,000 aggregate principal amount of its First Mortgage
Bonds (the "New Bonds") in one or more series at prices and on terms to be
determined at the time of sale. This Prospectus will be supplemented by a
prospectus supplement (the "Prospectus Supplement") which will set forth, as
applicable, the aggregate principal amount, rate and time of payment of
interest, maturity, purchase price, initial public offering price, if any, any
redemption provisions and other specific terms of the series of the New Bonds
in respect of which this Prospectus is being delivered.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Company may sell the New Bonds through underwriters, dealers or agents,
or directly to one or more purchasers. The Prospectus Supplement will set
forth the names of underwriters, dealers or agents, if any, any applicable
commissions or discounts and the net proceeds to the Company from any such
sale. See "Plan of Distribution" for possible indemnification arrangements for
underwriters, dealers, agents and purchasers.
----------------
The date of this Prospectus is May 15, 1992.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY OR ANY OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
AVAILABLE INFORMATION
System Energy Resources, Inc. ("Company" or "System Energy") is subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission ("SEC"). Such reports
include information, as of particular dates, concerning the Company's directors
and officers, their remuneration, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company. Such reports and other information can be inspected and copied at the
public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; and at the Regional Offices of the SEC at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 75 Park
Place, 14th Floor, New York, New York 10007. Copies of this material can also
be obtained at prescribed rates from the Public Reference Branch of the SEC at
its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Shareholders of the Company are furnished copies of an Annual Report to
Shareholders containing financial statements as of the end of the most recent
fiscal year audited and reported upon (with an opinion expressed) by
independent auditors.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to the Exchange Act are
incorporated in this Prospectus by reference and shall be deemed to be a part
hereof:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1991 (including portions of the Company's 1991 Annual Report to
Shareholders stated therein to be incorporated therein by reference) ("1991
10-K").
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992.
In addition, all documents subsequently filed by the Company with the SEC
pursuant to Section 13, 14 or 15(d) of the Exchange Act prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents (such documents, and the documents enumerated above, being herein
referred to as "Incorporated Documents," provided, however, that the documents
enumerated above or subsequently filed by the Company pursuant to Section 13,
14 or 15(d) of the Exchange Act prior to the filing of the Company's next
Annual Report on Form 10-K with the SEC shall not be Incorporated Documents or
be incorporated by reference in this Prospectus or be a part hereof from and
after any such filing of an Annual Report on Form 10-K).
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for all purposes to the extent that a statement
contained herein or in any other subsequently filed Incorporated Document or in
an accompanying Prospectus Supplement modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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<PAGE>
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE INCORPORATED DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE HEREIN.
REQUESTS SHOULD BE DIRECTED TO STEVE C. MCNEAL, CORPORATE FINANCE, ENTERGY
SERVICES, INC. P.O. BOX 61000, NEW ORLEANS, LA. 70161, TELEPHONE NUMBER: 504-
569-4363.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR WITH RESPECT TO ANY SERIES
OF THE NEW BONDS, THE PROSPECTUS SUPPLEMENT RELATING THERETO, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS AND A PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF
THIS PROSPECTUS OR THAT PROSPECTUS SUPPLEMENT.
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INTRODUCTION
The Company is a wholly-owned subsidiary of Entergy Corporation ("Entergy").
Its principal asset consists of a 90% ownership/leasehold interest in a 1,250
megawatt ("MW") nuclear-powered electric generating unit near Port Gibson,
Mississippi ("Grand Gulf 1"). The Company sells the power and energy therefrom
exclusively to four affiliated companies which are also subsidiaries of
Entergy. These sales are made under the Unit Power Sales Agreement between the
Company and its affiliates, which has been approved by the Federal Energy
Regulatory Commission ("FERC"). At December 31, 1991, the Company had net
utility plant of $3.1 billion, long-term debt of $1.8 billion (of which
approximately $0.9 billion consisted of First Mortgage Bonds) and common
shareholder's equity of $1.2 billion. For the year ended December 31, 1991, the
Company had operating revenues of $686.7 million and net income of $104.6
million.
THE COMPANY
The Company was formed in 1974 to construct and finance certain base-load
generating units for the operating subsidiaries of Entergy. At that time, the
Company contracted with Mississippi Power & Light Company ("MP&L") for MP&L to
act as the Company's agent for the design, construction, operation and
maintenance of the Grand Gulf Station, a proposed two-unit nuclear-powered
electric generating station having a capacity of 2500 MW. On July 28, 1986, the
Company's name was changed from "Middle South Energy, Inc." to "System Energy
Resources, Inc.," and effective December 20, 1986, System Energy assumed the
primary responsibilities, previously assigned to MP&L, for the management,
operation and maintenance of the Grand Gulf Station. At that time, the agency
relationship between System Energy and MP&L was terminated, and the MP&L
nuclear organization was transferred, virtually intact to System Energy. In
1990, an affiliate, Entergy Operations, Inc. ("Entergy Operations"), took over
responsibility for operating Grand Gulf 1.
System Energy's principal executive offices are located at Echelon One, 1340
Echelon Parkway, Jackson, Mississippi 39213. System Energy's telephone number
is 601-984-9000. System Energy is a subsidiary of Entergy, a utility holding
company which owns all the common stock of Arkansas Power & Light Company
("AP&L"), Louisiana Power & Light Company ("LP&L"), MP&L and New Orleans Public
Service Inc. ("NOPSI") (collectively referred to as "System operating
companies"). Other subsidiaries of Entergy are Entergy Services, Inc., a
service company, Entergy Operations, a nuclear service company, Entergy Power,
Inc., a wholesale power company and Electec, Inc., a non-utility company. The
System operating companies own System Fuels, Inc., which is responsible for the
procurement, transportation and storage of fuel supplies for the System
generating plants. Entergy Operations operates, in addition to Grand Gulf 1,
the other nuclear generating plants of the System.
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<PAGE>
System Energy is engaged in the financing of its 90% interest in Grand Gulf
1, approximately 78.5% of which is owned outright and 11.5% of which is leased
on a long-term basis. None of System Energy's First Mortgage Bonds, including
the New Bonds, have or will have a lien on or other interest in its leased
interest in Grand Gulf 1. Grand Gulf 1 was placed in commercial operation on
July 1, 1985. System Energy's investment (excluding nuclear fuel) in its 90%
share of Grand Gulf 1 is presently approximately $3.5 billion. Construction of
the proposed second unit of the Grand Gulf Station was suspended in 1985 and
this unit was canceled and written off in 1989.
The operating revenues of System Energy are derived from the allocation of
the capacity and energy associated with System Energy's 90% share of Grand Gulf
1 to the System operating companies pursuant to the Unit Power Sales Agreement.
The Unit Power Sales Agreement, as modified and approved by the FERC, provides
for the allocation in various percentages of System Energy's capacity and
energy from Grand Gulf 1 (and the costs related thereto) to the System
operating companies on a full cost of service basis. The other 10% of Grand
Gulf 1 is owned by South Mississippi Electric Power Association, a wholesale
cooperative in Mississippi.
The information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the Incorporated Documents. For further information concerning the
System operating companies and Entergy, reference is made to the information
relating to such companies which accompanies the Incorporated Documents.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the New Bonds
will be used for one or more of the following purposes: (i) the acquisition and
retirement or payment at maturity of outstanding First Mortgage Bonds; (ii) the
payment of construction costs and nuclear fuel costs; and (iii) the repayment
of short - and other long - term borrowings and for other working capital
needs. If so indicated in the Prospectus Supplement, such proceeds may also be
used for such other purposes as are indicated therein.
DESCRIPTION OF THE NEW BONDS
General. The New Bonds will be issued under System Energy's Mortgage and Deed
of Trust, dated as of June 15, 1977, to United States Trust Company of New York
and Gerard F. Ganey (successor to Malcolm J. Hood), as Trustees, as
supplemented by fourteen supplemental indentures thereto, all of which
(collectively referred to as the "Mortgage") are exhibits to the Registration
Statement.
The statements herein concerning the New Bonds and the Mortgage are merely an
outline and do not purport to be complete. They make use of terms defined in
the Mortgage and are qualified in their entirety by express reference to the
Mortgage and the cited sections and articles as supplemented.
Terms of Specific Series of the New Bonds. A Prospectus Supplement will
describe the following terms of, or applicable to, a series of the New Bonds to
be issued: (1) the designation of such series of the New Bonds; (2) the
aggregate principal amount of such series; (3) the date on which such series
will mature; (4) the rate at which such series will bear interest and the date
from which such interest accrues; (5) the dates on which interest will be
payable; (6) the prices, including the "general redemption prices" and the
"special redemption prices" referred to below, and the other terms and
conditions upon which the particular series may be redeemed by System Energy
prior to maturity; and (7) the designation of the particular Supplementary
Capital Funds Agreement and Assignment and Assignment of Availability
Agreement, Consent and Agreement applicable to a given series of New Bonds.
Form and Exchange. The New Bonds will be delivered in fully registered form
in denominations of $1,000 and, at the option of System Energy, in any multiple
or multiples thereof. No service charge will be made for any transfer or
exchange of New Bonds.
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Cash deposited under any provisions of the Mortgage (with certain exceptions)
may be applied to the redemption or purchase (including the purchase from
System Energy) of First Mortgage Bonds of any series. (Mortgage, Article X)
Security. The New Bonds, together with all other First Mortgage Bonds now or
hereafter issued under the Mortgage are secured by the Mortgage, which
constitutes, in the opinion of Wise Carter Child & Caraway, Professional
Association (counsel for System Energy): (i) a valid, first lien on all real
property, which does not include property held by the Company under leases, and
interests in real property and the improvements thereon specifically described
in the granting clauses of the Mortgage (and not excepted from the Lien of the
Mortgage by the provisions thereof) and (ii) a first perfected security
interest in all personal property, interests in personal property and fixtures
specifically described in the granting clauses of the Mortgage (and not
excepted from the Lien of the Mortgage by the provisions thereof), in each case
subject to no liens, charges or encumbrances, other than (a) Excepted
Encumbrances, (b) minor defects and encumbrances customarily found in
properties of like size and character which do not materially impair the use of
the property affected thereby in the conduct of the business of System Energy,
and (c) liens, defects and encumbrances, if any, existing or placed thereon at
the time of acquisition thereof by System Energy and except as limited by
bankruptcy law. There are excepted from the Lien certain property, including
all cash and securities, all products, equipment, apparatus, materials or
supplies held for sale or other disposition or consumable during use including
Nuclear Fuel; rolling stock, automobiles, vehicles and aircraft and any Space
Satellites; timber, minerals, mineral rights and royalties; and receivables,
contracts, leases and operating agreements.
The Mortgage contains provisions for subjecting after-acquired property
(subject to pre-existing liens) to the Lien thereof, subject to limitations in
the case of consolidation, merger or sale of substantially all of System
Energy's assets. (Mortgage, Secs. 16.02 and 16.03.)
The Mortgage requires that most proceeds of property insurance be held by the
Corporate Trustee pending release to System Energy or to stated uses in respect
of First Mortgage Bonds. See Note 8 of System Energy's Notes to Financial
Statements, "Commitments and Contingencies--Nuclear Insurance" in System
Energy's Annual Report contained in the 1991 10-K and subsequent Incorporated
Documents for information with respect to a Nuclear Regulatory Commission rule
which could significantly restrict the availability of insurance proceeds to
the Corporate Trustee and the holders of First Mortgage Bonds.
The Fifth, Sixth, Seventh, Ninth, Tenth, Eleventh and Twelfth Series Bonds
have as additional security the sole and exclusive benefit of the Fourteenth,
Fifteenth, Sixteenth, Eighteenth, Nineteenth, Twentieth and Twenty-first
Assignments of Availability Agreement, Consent and Agreement, respectively, and
the Fourteenth, Fifteenth, Sixteenth, Eighteenth, Nineteenth, Twentieth and
Twenty-first Supplementary Capital Funds Agreements and Assignments,
respectively, and all proceeds therefrom (Ninth Supplemental, Sec. 8.01;
Seventh, Eighth, Eleventh, Twelfth, Thirteenth and Fourteenth Supplementals,
Sec. 7.01.)
Each series of the New Bonds will have as additional security the sole and
exclusive benefit of its own Assignment of Availability Agreement, Consent and
Agreement among System Energy, the System operating companies and the Trustees
and its own Supplementary Capital Funds Agreement and Assignment among System
Energy, Entergy and the Trustees, and all proceeds therefrom. The Fourteenth,
Fifteenth, and Sixteenth Assignments of Availability Agreement, Consent and
Agreement and Fourteenth, Fifteenth and Sixteenth Supplementary Capital Funds
Agreements and Assignments include provisions requiring the approval of 100% of
the assignees for certain amendments and waivers, and 66 2/3% for other
amendments and waivers of specified provisions of the Availability Agreement,
the Capital Funds Agreement or the particular Assignment of Availability
Agreement Consent and Agreement or Supplementary Capital Funds Agreement and
Assignment which runs to the benefit of such assignee. Under the Eighteenth,
Nineteenth, Twentieth and Twenty-first Assignments of Availability Agreement,
Consent and Agreement and each Assignment relating to the New Bonds, provisions
of the Availability Agreement and such Assignments may be amended or waived at
any time upon the receipt of consents from the holders of more than 50% of the
5
<PAGE>
aggregate outstanding principal amount of the affected series of Bonds and any
other necessary consents. Similarly, the Eighteenth, Nineteenth, Twentieth and
Twenty-first Supplementary Capital Funds Agreements and Assignments and each
Supplementary Capital Funds Agreement and Assignment relating to the New Bonds
will provide that the provisions of the Capital Funds Agreement and such
Supplements may be amended or waived at any time upon the receipt of consents
from the holders of more than 50% of the aggregate outstanding principal amount
of the affected series of Bonds and any other necessary consents.
Under each Assignment of Availability Agreement, Consent and Agreement,
System Energy has assigned to the bondholders secured thereby its rights, on a
pari passu basis, to certain payments which the System operating companies have
agreed to make to System Energy in respect of the Grand Gulf Station. Under
each Supplementary Capital Funds Agreement and Assignment, System Energy has
assigned to the bondholders secured thereby its rights, on a pari passu basis,
to certain payments which Entergy has agreed to make to System Energy. System
Energy has reserved the right to assign its rights to these payments from the
System operating companies and Entergy to other lenders on a pari passu basis.
At present these rights are also assigned to a group of banks providing letters
of credit in respect of a lease of approximately an 11.5% undivided ownership
interest in Grand Gulf 1. See Note 8, "Commitments and Contingencies--
Reimbursement Agreement" and Note 9 "Leases--Sale and Leaseback Transactions"
in System Energy's Annual Report contained in the 1991 10-K and subsequent
Incorporated Documents for further information.
For a further description of the terms of the Availability and Capital Funds
Agreements and related agreements, reference is made to "Capital Requirements
and Future Financing--Certain System Financial and Support Agreements" in the
1991 10-K and subsequent Incorporated Documents.
Further, System Energy has reserved the right to terminate the Availability
Agreement, the Eighteenth, Nineteenth, Twentieth and Twenty-first Assignments
of Availability Agreement, Consent and Agreement and each Assignment relating
to the New Bonds, the Capital Funds Agreement and the Eighteenth, Nineteenth,
Twentieth and Twenty-first Supplementary Capital Funds Agreements and
Assignments and each Supplementary Capital Funds Agreement and Assignment
relating to the New Bonds upon delivery to the Corporate Trustee of an
Officers' Certificate stating that: (i) System Energy's First Mortgage Bonds
have been rated A3, A-, or A- or better, respectively, by Moody's, Standard &
Poor's and Duff & Phelps, or their successors, for at least the preceding 6
consecutive months; (ii) System Energy has obtained written confirmation from
each such rating agency, or their successors, that the ratings of System
Energy's First Mortgage Bonds rated by such rating agency had not then dropped
below A3, A- or A-; and (iii) said Agreements are similarly terminated as to
all other outstanding series of Bonds and all other indebtedness of System
Energy. (Eleventh, Twelfth, Thirteenth and Fourteenth Supplementals, Sec.
9.07.)
System Energy has reserved the additional right to terminate the Availability
Agreement, each Assignment relating to the New Bonds, the Capital Funds
Agreement and each Supplementary Capital Funds Agreement and Assignment
relating to the New Bond upon delivery to the Corporate Trustee of an Officers'
Certificate stating that (i) with respect to each series of bonds established
prior to June 1, 1992, either (a) no bonds of such series remain Outstanding or
(b) the requisite number of bonds of such series have consented to the
termination of the Availability Agreement, the Assignments thereof, the Capital
Funds Agreement and the Supplements thereto, and (ii) said Agreements are
similarly terminated as to all other Outstanding series of bonds and all other
indebtedness of System Energy. (Fifteenth Supplemental, Sec. 11.04.)
Under each Supplemental Indenture relating to the New Bonds, System Energy
will covenant that it will not grant any security interest in its rights under
the System Agreement, the Availability Agreement, the related Assignment of
Availability Agreement, the Capital Funds Agreement or the related
Supplementary Capital Funds Agreement and Assignment, except for security
interests contemplated by such Assignment of Availability Agreement and
Supplementary Capital Funds Agreement and Assignment, respectively. In
addition, with certain restrictions, System Energy has covenanted that it will
not grant a security interest in its rights under any agreement for the sale of
capacity and or energy from Grand Gulf 1 unless it simultaneously, or prior
thereto, grants to the holders of all First Mortgage Bonds a pro rata, pari
passu interest in such collateral.
6
<PAGE>
Each Supplemental Indenture relating to the New Bonds will also permit System
Energy to deposit with a trustee cash or United States Government obligations,
either of which would provide security for the New Bonds in lieu of the Lien of
the Mortgage. In such event, System Energy would remain liable to pay when due
the principal of, premium, if any, and interest on the New Bonds, but would no
longer be subject to the general covenants of such Supplemental Indenture. If
all Outstanding Bonds are similarly defeased, System Energy would no longer be
subject to the covenants of the Mortgage.
Issuance of Additional First Mortgage Bonds. Subject to the general
restrictions on indebtedness referred to below under "Restrictions on
Indebtedness", First Mortgage Bonds of any series may be issued from time to
time on the bases of (1) 60% of the lesser of the cost or fair value of
property additions after adjustments to offset retirements; (2) retirement of
First Mortgage Bonds; and (3) deposit of cash. Deposited cash may be withdrawn
upon the bases stated in (1) and (2). Property additions generally include
electric property acquired but may not include items excepted from the Lien as
summarized above under "Security". Various earnings tests are applicable in
certain cases for the issuance of additional First Mortgage Bonds. (See
"Restrictions on Indebtedness".) System Energy presently expects to issue all
of the New Bonds against the retirement of First Mortgage Bonds. At March 31,
1992, System Energy had $478.0 million of available property additions, against
which $286.8 million of First Mortgage Bonds could have been issued. The
issuance tests in the Mortgage are not expected to limit the ability of System
Energy to issue the New Bonds.
Restrictions on Indebtedness. The Mortgage provides that no First Mortgage
Bonds shall be delivered (with certain exceptions relating to issuance upon the
basis of the retirement of First Mortgage Bonds) unless the Revised Adjusted
Net Earnings for 12 consecutive months out of the preceding 15 months equal at
least 2 times the annual interest requirements on all First Mortgage Bonds at
the time Outstanding, including the additional issue and all indebtedness of
prior or equal rank. No expenses for interest or for the amortization of debt
discount and expense, amortization of property (other than depreciation or
other similar provisions for property retirement), or for other amortization,
or for any other extraordinary charge to income of whatever kind or nature, or
for refunds of revenues previously collected by System Energy subject to
possible refund, or for any sinking fund or other device for the retirement of
any indebtedness are required to be deducted from System Energy's revenues or
its other income and no extraordinary items of any kind shall be included in
calculating Revised Adjusted Net Earnings. (Ninth and Tenth Supplementals, Art.
III.)
Release and Substitution of Property. Property may be released upon the bases
of (i) deposit of cash or, to a limited extent, purchase money mortgages, (ii)
property additions, after adjustments in certain cases to offset retirements
and after making adjustments for Qualified Lien Bonds outstanding against
property additions, and (iii) waiver of the right to issue First Mortgage
Bonds, without applying any earnings test. Cash may be withdrawn upon the bases
stated in (ii) and (iii) above subject to certain restrictions. (Mortgage, Art.
XI.)
The Mortgage contains special provisions with respect to Qualified Lien Bonds
pledged, and disposition of moneys received on pledged prior lien bonds.
(Mortgage, Art. VIII and IX.)
Defaults. Defaults are defined as being default in payment of principal or
any premium; default for 60 days in payment of interest; certain events in
bankruptcy, insolvency or reorganization; various defaults by Entergy or System
Energy or any System operating company in connection with the Supplementary
Capital Funds Agreement and Assignment related to the New Bonds, the
Availability Agreement, the Assignment of Availability Agreement related to the
New Bonds or the System Agreement, all generally subject to 30-day grace
periods and with the right of the holders of at least 15% in principal amount
of the New Bonds then Outstanding to give notice of Default in certain such
cases; the cessation of the Supplementary Capital Funds Agreement and
Assignment related to the New Bonds, the Availability Agreement, and the
Assignment of Availability Agreement related to the New Bonds to be in full
force and effect under certain circumstances, and unless a substitute agreement
is provided under certain conditions; certain sales, mortgages or pledges of
common stock of System Energy or the System operating companies, but not
including certain permitted mergers and dispositions of gas properties; and
default for 90 days after notice of other covenants. (Mortgage, Sec. 13.01.)
7
<PAGE>
The Trustees may withhold notice of default (except in payment of principal,
interest or an installment of any fund for retirement of First Mortgage Bonds)
if they think it is in the interest of the holders of First Mortgage Bonds.
(Mortgage, Sec. 13.02.)
The Corporate Trustee or holders of 25% of all First Mortgage Bonds may
declare the principal and interest due on Default. However, a majority in
principal amount of all Outstanding First Mortgage Bonds may annul such
declaration if the Default has been cured. (Mortgage, Sec. 13.03.) Holders of a
majority of First Mortgage Bonds may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustees or
exercising any trust or power conferred upon the Trustees, but the Trustees are
not required to follow such direction if not sufficiently indemnified for
expenditures. (Mortgage, Sec. 13.07.)
Restriction on Dividends and Stock Redemptions. System Energy may not declare
dividends, other than stock dividends, or make other distributions on or
acquisitions of, its stock (except where concurrently certain contributions or
stock proceeds are received) unless certain defaults do not exist and the sum
of certain indebtedness does not exceed 65% of adjusted capitalization. Certain
other restrictions on the payment of common stock dividends by System Energy
are discussed under Note 8 of System Energy's Notes to Financial Statements
"Commitment and Contingencies--Reimbursement Agreement" in the 1991 10-K and
subsequent Incorporated Documents.
Modification of the Mortgage. The rights of the holders of First Mortgage
Bonds generally may be modified with the consent of the holders of 66 2/3% of
the First Mortgage Bonds, and, if less than all series of First Mortgage Bonds
are affected, the consent also of the holders of 66 2/3% of the First Mortgage
Bonds of each series affected. (Mortgage, Art. XIX) System Energy has reserved
the right (without any consent or other action by holders of any series of
bonds created after 1991, including the New Bonds) to substitute for the
foregoing provisions the following: Bondholders' rights may be modified with
the consent of the holders of a majority of the bonds, but if less than all
series of the bonds are so affected, only the consent of a majority of the
affected bonds is required. In general, no modification of the terms of payment
of principal or interest and no modification affecting the lien or reducing the
percentage required for modification is effective against any bondholder
without his consent.
However, various supplemental indentures provide that certain provisions may
be amended or waived by the holders of a majority of bonds of the related
particular series or group of series. (Ninth Supplemental, Section 10.4,
Eleventh through Fourteenth Supplementals, Section 9.04, and Fifteenth
Supplemental, Section 4.01.)
RATIOS OF EARNINGS TO FIXED CHARGES
System Energy has calculated ratios of earnings to fixed charges pursuant to
Item 503(d) of SEC Regulation S-K as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-------------------------------------
DECEMBER 31,
--------------------------- MARCH 31,
1987 1988 1989 1990 1991 1992
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges(a)..... 2.17 1.98 --(b) 2.10 1.74 1.75
</TABLE>
- --------
(a) "Earnings", as defined by SEC Regulation S-K, represent the aggregate of
(1) net income, (2) taxes based on income, (3) investment tax credit
adjustments--net and (4) fixed charges. "Fixed Charges" include interest
(whether expensed or capitalized), related amortization and interest
applicable to rentals charged to operating expenses.
(b) Earnings for the twelve months ended December 31, 1989 were inadequate to
cover fixed charges due to System Energy's cancellation and write-off of
its investment in Grand Gulf 2 in September 1989. The amount of the
coverage deficiency for fixed charges was $745.2 million.
8
<PAGE>
PLAN OF DISTRIBUTION
System Energy may sell the New Bonds in one or more sales in any of three
ways: (i) through one or more underwriters or dealers; (ii) directly to a
limited number of purchasers or to a single purchaser; or (iii) through one or
more agents. The Prospectus Supplement relating to a series of the New Bonds
will set forth the terms of the offering, as applicable, of the New Bonds,
including the name or names of any underwriters, dealers or agents, the
purchase price of such New Bonds and the proceeds to System Energy from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If underwriters are used in the sale, the New Bonds will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. The
underwriter or underwriters with respect to a particular underwritten offering
of New Bonds will be named in the Prospectus Supplement relating to such
offering and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover page of such Prospectus Supplement.
Unless otherwise set forth in such Prospectus Supplement, the obligations of
the underwriters to purchase the New Bonds will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all
such New Bonds if any are purchased; provided that the agreement between System
Energy and the underwriter or underwriters providing for the sale of the New
Bonds may provide that under certain circumstances involving a default of
underwriters less than all of the New Bonds may be purchased.
System Energy may sell one or more series of the New Bonds through
underwriters after acceptance of a proposal or proposals for the purchase
thereof from such underwriters.
If so indicated in the applicable Prospectus Supplement, System Energy will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase New Bonds from System Energy at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date or
dates in the future. Such contracts will be subject to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of such contracts.
Subject to certain conditions, System Energy may agree to indemnify any
underwriters, dealers, agents or purchasers, and their controlling persons
against certain civil liabilities, including liabilities under the Securities
Act of 1933.
9
<PAGE>
EXPERTS AND LEGALITY
The financial statements of System Energy incorporated by reference in this
Prospectus, except to the extent described below, have been audited by Deloitte
& Touche, independent public accountants, as stated in their report (which
report includes an explanatory paragraph as to an uncertainty resulting from a
regulatory proceeding), which are included in the latest Annual Report of the
Company on Form 10-K incorporated by reference herein, and such financial
statements have been so incorporated by reference in reliance upon such report
given upon their authority as experts in auditing and accounting.
With respect to the unaudited interim financial information included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992
which is incorporated herein by reference, Deloitte & Touche have applied
limited procedures in accordance with professional standards for a review of
such information. However, as stated in their report included in such Quarterly
Report on Form 10-Q, and incorporated by reference herein, they did not audit
and do not express an opinion on that unaudited interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche are not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their reports on the unaudited interim financial
information because that report is not a "report" or "part" of the Registration
Statement prepared or certified by an accountant within the meaning of Sections
7 and 11 thereof.
The statements as to matters of law and legal conclusions made under
"Description of the New Bonds" have been reviewed by Wise Carter Child &
Caraway, Professional Association, Jackson, Mississippi, and, except as to
"Security" under "Description of the New Bonds", by Reid & Priest, New York,
New York, and are set forth herein in reliance upon the opinions of said firms,
respectively, and upon their authority as experts. The statements made or
incorporated by reference herein as to matters of law and legal conclusions,
based on the opinion or belief of System Energy or otherwise, pertaining to
titles to properties, franchises and other operating rights of System Energy,
regulations to which System Energy is subject and any legal proceedings to
which System Energy is a party, are made on the authority of Wise Carter Child
& Caraway, Professional Association, and such statements are included or
incorporated by reference herein in reliance upon their authority as experts.
All statements made or incorporated by reference herein as to matters of law
and legal conclusions, based on the opinion or belief of any System operating
company or otherwise, pertaining to the titles to properties, franchises and
other operating rights of the System operating companies, and their
subsidiaries, the regulations to which they are subject and any legal
proceedings to which they are parties, are made on the authority of Friday,
Eldredge & Clark, Little Rock, Arkansas, as to AP&L and Associated; Monroe &
Lemann (A Professional Corporation), New Orleans, Louisiana, as to LP&L and
NOPSI (not including litigation challenging the Council of the City of New
Orleans' February 4, 1988 prudence resolution as to NOPSI's involvement with
Grand Gulf 1 and the 1991 NOPSI settlement referred to in the 1991 10-K); Wise
Carter Child & Caraway, Professional Association, Jackson, Mississippi, as to
MP&L; and Jones, Walker, Waechter, Poitevent, Carrere and Denegre, New Orleans,
Louisiana, as to litigation challenging the Council's February 4, 1988 prudence
resolution as to NOPSI's involvement with Grand Gulf 1 and the 1991 NOPSI
Settlement referred to in the 1991 10-K; and such statements are incorporated
by reference herein upon their authority as experts.
The statements as to matters of law and legal conclusions with respect to
legal proceedings with respect to NOPSI referred to under Item 1--"Business--
Regulation and Litigation--Other Regulation and Litigation" in the 1991 10-K
have been prepared under the supervision of, and reviewed by, Thomas O. Lind,
Esq., Vice President--Regulatory Counsel, Secretary and Assistant Treasurer of
NOPSI, and such statements are incorporated by reference herein upon his
authority as an expert.
The legality of the New Bonds is being passed upon for System Energy by Wise
Carter Child & Caraway, Professional Association, Jackson, Mississippi, and
Reid & Priest, New York, New York, and for any
10
<PAGE>
underwriters, dealers or agents by Winthrop, Stimson, Putnam & Roberts, New
York, New York. However, all legal matters pertaining to the organization of
System Energy, titles to property, franchises and the lien of the Mortgage have
been passed upon only by Wise Carter Child & Caraway, Professional Association.
In rendering such opinions, such firms will, as appropriate, rely upon: as to
matters of Mississippi law, the opinion of Wise Carter Child & Caraway,
Professional Association, Jackson, Mississippi; as to matters of Arkansas law,
the opinion of Friday, Eldredge & Clark, Little Rock, Arkansas; and as to
matters of New York law, the opinion of Reid & Priest, New York, New York.
11
